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From course:

Economics A Level (DONEEEEEEE)

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Question:

Why may a NMW lead to Unemployment?

Author: eric_galvao



Answer:

-Introducing a NMW which is Higher than the Industry's Equilibrium Wage leads to the Wage Rate rising from W to NMW. This means the Demand of Labour Contracts while Supply Increases -Hence an Excess of Labour exists, meaning Unemployment Exists! The Amount of Unemployment depends on the Elasticity of Demand and Supply


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